Flat-Rate Shipping: Meaning, Advantages & Disadvantages For Your E-Commerce Business
As shipping margins play a crucial role in the success and profitability of any eCommerce business, nailing down the most beneficial shipping methods available can be a surefire way to positively impact the sustainability and efficiency of your organisation.
Today, we will take a look into flat-rate shipping and attempt to break down its pros and cons to help you decide whether it is a suitable option for you.
What is Flat-Rate Shipping?
Flat-rate shipping – sometimes referred to as linear rate shipping – is a method of shipping that attaches a fixed value onto parcels: in practical terms, this means that the price of shipping is not affected by the size, weight or dimensions of a parcel.
Sellers May Be Drawn to Flat-Rate Shipping
Some sellers may be drawn to flat-rate shipping via:
- The simplification of shipping – one price ships all
- Potential marketing opportunities, leading consumers to be enticed to spend more
How Does Flat-Rate Shipping Work?
As flat-rate shipping is not influenced by size, weight or dimension: what matters more, is how much you can cram into a flat-rate shipping box.
There are a number of simple steps to follow if you wished to use flat-rate shipping:
- Get Your Flat-Rate Shipping Box
As opposed to using your own branded boxes, you will pick from a selection of flat-rate shipping boxes, provided by your shipping company of choice.
- Pack and Address Your Box
Pack all of the necessary items and packing slip into the flat-rate shipping box and affix the addressee.
- Ship the Items
Take the sealed, addressed flat-rate shipping to your shipping partner.
The Advantages of Flat-Rate Shipping
There are a few distinct advantages of the flat-rate shipping model, including:
- Price Consistency
Irrelevant of the parcel, its weight or dimensions, it will always be attributed to the same price. It is always best to do your due diligence with regard to your choice of shipping partner and their price slabs – for both flat-rate and standard shipping prices – so you can determine the best shipping partner for you and your bottom line.
- Time Efficiency
Conducting thorough research on shipping rates on a per dispatch basis can often be time-consuming for smaller eCommerce companies, particularly if considerable time is eaten away by said research or delays caused by shipping transactions.
Using flat-rate shipping can substantially simplify the shipping process via streamlining the pricing structure, as well as entirely eliminating weighing and dimension tracking, as well as price calculations.
- Transaction Transparency
Businesses and individuals are always happy with the transparency provided by flat-rate shipping: often delivering a digestible breakdown of various costs.
With limitations of the process being confined to only dimension constraints (predetermined box sizes) and weight limits, it means that there are no hidden or additional costs involved, therefore no unwanted surprises.
- Fewer Miscalculations and Quicker Equations
Flat-rate shipping can eliminate many of the time-consuming aspects of standard shipping methods, even if spending adequate research time can save a few pennies.
As there is less opportunity for human error – such as miscalculating weights or dimensions – the process is smoother with regards to time and a business’s bottom line.
Disadvantages of Flat-Rate Shipping
As with any other shipping method, flat-rate shipping has its disadvantages too. The two most important things to consider are:
- Dimension Constraints
As flat-rate shipping boxes and containers are often limited to three (sometimes four) sizes, there are dimensional constraints to consider before preemptively confirming your shipping method and price to your customer.
- May Discourage Smaller Orders
The price of flat-rate shipping may be prohibitive for orders that are of a single item or a small number of items.
Why Do We Feel Flat-Rate Shipping is Good for eCommerce?
There are a number of tangible benefits to using flat-rate shipping, particularly for eCommerce businesses.
Flat-rate shipping can notably simplify the dispatch process for eCommerce businesses. Dimensional weight and the distance between shipping zones can significantly increase the overall cost of shipping.
As the distribution process is simplified, flat-rate shipping can be used to great effect by brands that are smaller in scale and self-fulfil their dispatches.
Flat-Rate Shipping Vs. Standard Shipping Rates
The shipping rates, when using standard shipping rates, will vary every time your business ships a parcel. Typically, prices under the standard shipping rate model will be affected by the size and weight of the parcel, as well as the distance required to travel to reach its destination: all calculated before shipping.
Shipping a parcel via standard rate pricing is seen as the traditional approach, with parcels needing to be weighed before being sent.
The different benefits between different the two pricing structures can be found within the table below:
Flat-rate shipping is a popular method thanks to its ability to save money through reduced costs. If your business wishes to look further at alternative shipping methods, feel free to get in touch with the distribution experts at Breakwells, we will be happy to provide help and assistance to you via order fulfilment, warehousing and logistics solutions.
I’ve heard of free flat-rate shipping: what is it?
This is when you don’t charge the customers of your eCommerce business a shipping fee, often absorbing the price of shipping into the price of the product or service. As free shipping is a way of enticing customers to complete their purchase/order more, it is a great way of spreading your spending, increasing your average order value and preserving your overall margins.
How does flat-rate shipping work?
To use a flat-rate shipping service, you will need to purchase a flat-rate shipping box from your delivery company of choice, affix the address, then ship the box via the local delivery point.
How long does flat-rate shipping take?
Though it varies, flat-rate shipping will typically take 2-3 business days to reach its delivery destination during non-business periods.
Is flat-rate shipping cheaper than standard shipping?
It entirely depends on the situation, though it can often be cheaper. As a business, you should weigh up the options to determine which shipping methods are most cost-effective.